Metro-Goldwyn-Mayer Back : Turner Broadcasting Completes MGM Deal

After months of uncertainty, the famed Hollywood studio that portrayed the burning of Atlanta in “Gone With the Wind” came under the ownership Tuesday of a modern Atlanta empire: Turner Broadcasting System.

The name Metro-Goldwyn-Mayer itself also made a comeback under new proprietor Ted Turner, who owns about 80% of the broadcasting enterprise. In recent years, following a merger with United Artists Corp., the movie company has been known as MGM/UA Entertainment Co.

Kirk Kerkorian, the majority (50.1%) stockholder who controlled MGM for more than 15 years, on Tuesday bought the United Artists subsidiary from Turner in a transaction timed to coincide with the closing of the MGM purchase.

That was done as soon as Turner acquired some 53 million shares of MGM from its stockholders for $20 cash and a share of new Turner preferred stock for each MGM/UA share, a deal valued at $1.25 billion to $1.5 billion.

The new Turner preferred, already trading on a “when-issued” basis, closed Tuesday at $6.75.

Meanwhile, Kerkorian’s Tracinda Corp. in Las Vegas said that United Artists stock certificates would be mailed within the next week to MGM/UA shareholders who had contracted to buy 7 million shares, or about 14% of the total.

The price for the approximately 53 million UA shares was $9 each, or about $480 million. The stock, also trading on a “when-issued” basis, closed Tuesday at $13.875. That was down 12.5 cents from last Friday.

At Metro-Goldwyn-Mayer in Culver City, Turner’s first official act Tuesday was to promote Alan Ladd Jr. to chairman and chief executive. Since joining the loss-plagued studio a year ago, Ladd had been president and chief operating officer under longtime Kerkorian lawyer Frank Rothman, who is returning to a law practice.

Turner Broadcasting has indicated in public disclosure documents in recent months that the debt it is taking on has caused it to offer to sell part or all of the MGM assets, including the studio property.

Ted Turner himself was at the Culver City lot Tuesday to conduct business. He was having meetings with studio personnel while lawyers and executives closed the deal in New York, according to studio spokesman Arthur Rockwell.

Turner also noted that funds previously earmarked for theatrical film making became available Tuesday with the completion of the merger, allowing MGM to get on with production.

In a telephone interview from New York, Ladd said that with the deal done and the money available, the studio’s situation has turned from unsettled to “very healthy.”

“Everyone now knows where the studio stands,” Ladd said. “There were lots of rumors about what was going to happen.”